THE WHITE HOUSE
Office of the Press Secretary
Tax Incentives for Working Families, Education, Environment, Research:
Important Provisions Attached to The Ticket to Work and Work Incentives Improvement Act December 17, 1999
Extending Tax Provisions for Working Families, Education, the Environment, and Scientific Research The bipartisan Jeffords-Kennedy-Roth-Moynihan Ticket to Work and Work Incentives Improvement Act, which the President will sign today, extends several important tax provisions. These tax cuts promote research and development, improve school facilities in poor communities, encourage employers to pay for continuing education, help people move from welfare to work, encourage businesses to clean up polluted "brownfields," stimulate clean energy, and ensure that American families continue to benefit from important tax credits. Some of these provisions include:
Extending the Research and Experimentation Tax Credit: President Clinton has championed the research tax credit because it provides incentives for private sector investment in research and innovation that can help increase America's economic competitiveness and enhance U.S. productivity. In the past, the R&E tax credit was usually extended for only one year at a time. This bill extends the R&E tax credit through 2004 - the longest extension ever. It will encourage companies to undertake new multi-year research activities, secure in the knowledge that the 20 percent tax credit will continue to be available. The credit applies to the amount by which a firm's research expenses in a taxable year exceed a base amount, the latter determined by a number of factors, including the average of the firm's gross receipts for the four preceding years.
Providing for School Construction: The bill extends Qualified Zone Academy Bonds (QZABs) through 2001. QZABs provide no-interest loans to school districts in needy areas to fund expenditures on rehabilitation and repairs, educational equipment, curriculum development, and teacher training. QZABs have been used to purchase computers and develop technology-based curricula, renovate and repair a charter school, purchase computer software and hardware to develop literacy programs, and even to establish the first public secondary military academy in the nation.
Ensuring That American Families Continue to Benefit From Tax Credits: This provision guarantees that no taxpayer will have personal tax credits - such as the child credit, the child and dependent care tax credit, and the Hope scholarship and Lifetime Learning credits - limited by the alternative minimum tax (AMT). Besides lowering people's tax bills, it will save the millions of taxpayers who claim personal tax credits from the complex calculations necessary to determine if their credits are limited by the AMT and, if so, by how much. The bill extends these rules for the alternative minimum tax through 2001.
Extending the Work Opportunity Tax Credit: This tax credit encourages employers to hire individuals belonging to groups that have traditionally had a hard time securing jobs. Targeted groups include disadvantaged youth, including those living in empowerment zones and enterprise communities, welfare recipients, and qualified veterans. The maximum credit paid to the employer can reach 40 percent of an individual's first $6,000 in wages. The President proposed to extend this credit in his FY 2000 budget and the bill includes an extension through 2001.
Extending the Welfare-to-Work Tax Credit: This tax credit encourages employers to hire and retain certain long-term workforce recipients. The maximum credit to an employer is as much as 50 percent of wages, with a maximum credit of $8,500 per qualified employee over two years. The President proposed to extend this credit in his FY 2000 budget and the bill includes an extension through 2001.
Encouraging Energy Efficiency: This bill extends through 2001 the tax credits for wind and biomass energy production. These tax credits encourage no- (wind) and low- (biomass) emission energy production. The biomass tax credit encourages farmers to grow certain materials that can be burned to produce energy. Energy from wind and biomass preserves scarce resources, reduces pollution and decreases our reliance on imported oil.
Cleaning Up Brownfields: The budget extends the tax provision that allows businesses to fully deduct the cost of cleaning up polluted "brownfields" in targeted areas through 2001. This provision encourages the redevelopment of blighted properties, which improves the environment and makes communities more livable.
Tax Relief to Encourage Worker Training: The bill extends through 2001 the tax relief provided by Section 127 of the Tax Code, which allows educational courses taken at degree-granting institutions and paid for by an employer to be treated as a tax-free fringe benefit by the employee. By encouraging worker education, it helps employers expand the skills of their work force and expands the opportunities of workers to adapt to new technologies.
Encouraging First-Time Homeowners in the District of Columbia: The legislation extends through 2001 the $5,000 tax credit for low- and moderate-income first-time homebuyers who purchase homes in the District of Columbia. This tax credit encourages homeownership and strengthens neighborhoods in the Capital City.